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Verkhovna Rada passed the Law “On averting financial meltdown and laying the groundwork for economic growth in Ukraine”

The Law “On averting financial meltdown and laying the groundwork for economic growth in Ukraine” (hereinafter, “Law No. 1166”) was officially published on 31 March 2014.  This Law will go into effect gradually, with some of its provisions becoming operative as early as from 01 April 2014.  

Summary of innovations to take effect from 01 April 2014
  • 18% and 20% will be applied as permanent base rates of CIT and VAT respectively;
  • 7% VAT will be applied to supplies of pharmaceuticals and healthcare products;
  • 0% VAT will be applied to exportation of certain grain and technical crops under the export customs regime by agricultural enterprises – growers of such grain and technical crops having been grown on agricultural lands which are owned or used by such enterprises on a permanent basis as of the date of such exportation (this provision is transitional and will expire on 01 October 2014);
  • 0.5% obligatory state pension insurance duty will be applied to cash or non-cash purchase of foreign currency by legal entities and individuals;
  • Increase in the rates of:
    • fee for the use of the radiofrequency resource;
    • fee for the use of subsoil for mining; the definition of payers for subsoil use has been expanded;
    • excise tax on new motorcars and motorcycles with engine capacity exceeding 0.5 l; excise tax rates for motorcycles with engine capacity up to 0.5 l have been increased up to EUR 0.06 per cc;  
    • excise tax on automobile bodies.  
  • Nontaxable importation of goods sent by mail has been reduced from EUR 300 to EUR 150.
Innovations to take effect at a later date:
  • Effective from 01 July 2014, progressive 15%, 20% and 25% PIT rates will apply to passive income (interest, except for interest not exceeding 17 subsistence minimums per year for an able-bodied person, dividends, interest, royalty, investment income), depending on a monthly amount of taxable income, with obligatory recalculation of accrued (paid) tax to be made by the taxpayer based on annual results.  
  • 15% (17%) PIT will be applied to pension payments exceeding UAH 10,000, to the excess amount (effective from 01 July 2014).
  • Excise tax rates and minimum excise liability have been increased for tobacco products (effective from 01 July 2014).
  • Increase of rates of excise tax on beer (effective from 01 May 2014), ethyl alcohol and other alcohol distillates, alcoholic beverages (effective from 01 September 2014).

Indexation of normative monetary value has been introduced for calculation of fixed agricultural tax base (effective from 01 January 2015).

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